You’ve cleaned the attic, checked under the beds, and bought the signs: you’re ready for a garage sale. But before you make your first sale, you’ll want to check if you need a sale and use tax permit.
First, typically you do not need to report to the IRS what you make from a garage sale, as long as you’re not selling the items for more than what you bought them for. For most of us, that means the mountains of Beanie Babies you sell for a couple of dollars a toy will not make it on to Uncle Sam’s radar.
In Texas, sales tax is due for “tangible personal property.” This includes things like clothing, books, furniture, toys, bicycles, and other things you’d normally see at a garage sale.
The exception for a sales and use tax permit is if you’re making what’s called an “occasional sale.”
In Texas law, an occasional sale means even though you are selling a taxable item, like CDs, DVDs, etc., you don’t need a sales tax permit. Occasional sales mean you may only hold a garage sale twice a year. It also means you can’t sell tangible personal property for more than $3,000 or you would need a sales tax permit.
If you’re a part of a group sale, things can get more difficult. The two most common situations where sales tax does apply is when student or church groups collect items for a garage sale or where the seller pays a fee for a booth or space rental to sell their items. In those situations, the seller does need a sales tax permit, unless they fall into some sort of other exception.
If you think you’re going to be making more than $3,000 or you plan to have more than two sales in a year, you’re going to need a sales tax permit. You can click here to get started. Note that it can take two to three weeks to receive your permit, so you’ll want to start the process early.
Now that you have your tax situation figured out, don’t forget to check your local ordinances for rules about garage sales. Most of the time this information can be found on your city’s government website under the “residents,” or a similarly named, tab.
In Stephenville, you’re allowed to have two garage sales per year per location. They can’t last more than three days and you’ll need a permit. Permits cost $3 before the sale and $5 the day of the sale, and can be picked up at City hall, or after hours at the Stephenville Police Department.
The sign needs to be visible from the street, can’t be on utility poles, and must be taken down immediately following the third day of sale. Finally, it’s important to follow all the rules or you could have a misdemeanor charge and be fined up to $200.
You probably won’t have problems with the federal government for a garage sale. If you’re making less than $3,000 and have less than two garage sales a year, you’re probably fine for Texas, too. Finally, don’t forget to check your local ordinances for rules about garage sales.
– The Business Team
Scott | Josh | Jeremy
The Allen Firm, PC 181 S. Graham Street | Stephenville, Texas 76401 Ph: 254.965.3185 | Fax: 254.965.6539